Apple pays $60 million for “iPad”

Apple has agreed to pay $60 million for the rights to use the name iPad inChina. It could have been a lot worse however: the payment settled a lawsuit claiming $1.6 billion.

The case came about because the Chinese firm Proview registered the name iPad (or rather IPAD) in 2000. Apple doesn’t dispute that Proview came up with the name first.

In 2009, a mysterious British firm called IP Application Development was registering the name as a trademark around the world. The firm didn’t actually produce anything, but was effectively a shell company controlled by Apple that had been set up solely to get the trademark without anyone figuring out Apple was working on a device named iPad.

Among these registrations acquisitions, Apple bought the rights to use the name from a Proview subsidiary company in Taiwan. When the Chinese firm complained about the issue last year, Apple argued that it was under the impression the deal with the Taiwan company was to take over its worldwide rights. The Chinese firm says its Taiwan subsidiary didn’t provide such rights and the deal can only ever have been for use of the name in Taiwan.

Proview, which by now was under the control of administrators, launched a lawsuit in China calling for 10 billion (US$1.6 billion) in compensation. It also asked for an injunction on sales; there were some reports of local officials in China clearing iPads from store shelves, though these appear not to have been authorized by courts.

Apple has now agreed to pay $60 million to settle the case and have the rights to use the name in China. That’s one hell of a premium given it only paid $55,000 to use the name in Taiwan, but when you take into account the potential damages and court costs, and then look at the potential benefits of being able to target the Chinese market without further legal problems, it may well be a price worth paying.

A separate case filed by Proview in California had accused Apple of misleading it through the use of the shell company, potentially tricking it into accepting a low price for the trademark; the logic was that if Proview knew it was Apple buying the name, it would have figured out it would be for a potentially hugely lucrative product. That case has already been dismissed.

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